Baltimore bill subsidizing affordable housing trust approved

Father Ty Hullinger prays in front of City Hall in September with supporters of the “Fund the Trust Act.” (Adam Bednar)

Legislation raising taxes to pay for Baltimore’s Affordable Housing Trust Fund heads to Mayor Catherine Pugh, who has promised to sign the bill.

The so-called “Fund the Trust Act” earned official approval from the Baltimore City Council on Monday. After an at times contentious process the bill passed with a small smattering of applause from backers in the gallery in the council chambers at City Hall.

The act is anticipated to deliver $13 million annually for the fund, which city voters approved in 2016 without a dedicated revenue source. The bill raises transfer fees 0.6 percent and recordation fees 0.15 percent on property sales of $1 million or more.

The bill, introduced by its lead sponsor, Councilman John Bullock, was submitted in April. The legislation as initially proposed raised taxes by 1 percent on the sale of non-owner occupied properties.

But the measure did not receive a committee hearing until September. Activists, who previously failed to secure a revenue source for the fund, grew concerned the council would not act on the proposal.

Various organizations backing the bill launched an effort to put a ballot question creating a funding mechanism before city voters. Affordable housing advocates proposed dedicating 5 cents of every $100 of assessed property value in the city to the fund.

Pugh’s administration, however, struck a deal with housing fund backers preventing the question from going to voters. The bargain required reducing the tax increases in the bill. The mayor, in turn, promised to provide $7 million in other city money by 2020 to the fund.

The legislation was opposed by commercial real estate interests, developers, and builders groups. They argued it’s bad policy to raise the city’s recordation and transfer taxes, which are already the highest in the state.

Baltimore Budget Director Bob Cenname also warned that increasing the taxes may create negative consequences for city finances and businesses. He described the revenue stream, which rises and falls with the city’s real estate market, as “highly volatile.”

The bill passed on “second reader” and faces one final vote before being sent to the mayor to be signed into law. Legislation that passes the second vote generally passes the Baltimore City Council.

The bill, sponsored by Councilman Eric Costello, charges transactions on services, such as Airbnb, the same 9.5 percent tax charged to city hotels. The legislation also requires residents renting space through services like Airbnb to be licensed by the city every two years.

There are 1,263 active short-term rental hosts in Baltimore, the city’s Department of Finance estimated in August, providing 2,105 rental units with an average daily rate of $120. The finance department anticipates charging the tax on short-term rentals could generate roughly $1 million a year in revenue.